Elite London schools draw foreign home buyers to capital

Students from University College London (UCL) celebrate with friends and family following a graduation ceremony on the Southbank in London, Britain, September 6, 2018. (Reuters)
Updated 06 September 2018

Elite London schools draw foreign home buyers to capital

  • Property prices in London have long been swelled by foreign investment, making living in the city unaffordable for those on lower incomes
  • Overseas parents spent about 2 billion pounds ($2.6 billion) on prime property near London schools over the past year, a report said

LONDON: Wealthy foreigners are spending billions of pounds on homes near London’s top private schools, even as demand for prime property in the British capital falters, new research has found.
Overseas parents spent about 2 billion pounds ($2.6 billion) on prime property near London schools over the past year, according to a report published on Wednesday by global property firm Knight Frank. Most were from China or Russia.
“Our analysis shows just how important the standard of top London schools is to wealthy international individuals and the demand this contributes to the London property market,” said Liam Bailey, global head of research at Knight Frank.
Property prices in London have long been swelled by foreign investment, making living in the city unaffordable for those on lower incomes, although price growth has slowed since Britain voted in a 2016 referendum to leave the European Union.
Anthony Breach, analyst with the British think-tank Center for Cities, said foreign ownership was exacerbating a broader lack of affordable housing in Britain’s capital.
“We need to build more housing, then more people could benefit from London’s strong economy and schools,” said Breach. “The supply of housing is not matching the demand.”
Knight Frank said political pressures coupled with an increase in taxation on high-value properties had put significant pressure on London’s luxury housing market.
But parents were still purchasing property in the capital while their children attend school. “Education is the driver,” Bailey told the Thomson Reuters Foundation.
“This is a sector which in terms of its appeal to a global market appears to be pretty much unaffected by Brexit ... and has remained very robust,” he said.
Prices have fallen by between 10 and 20 percent over the past three years at the top of the London market, according to Knight Frank’s report.
Bailey said lower property prices and a weakened pound may be attracting foreign parents to buy in London.
“Given the potential 10-year span of education for children that come over as young as 11 or 13, many of these parents are looking at a longer term commitment as opposed to a short term investment,” he said.
Knight Frank said the motivations for parents included the quality of education in Britain and the perceived boost to university and job prospects offered by attending prestigious London schools.
The most popular countries to send children to school after Britain were the United States followed by Canada and other European Union countries, the report found.
London Mayor Sadiq Khan has set ambitious targets to tackle a chronic housing shortage, undertaking a London-wide house building scheme of 650,000 new homes by 2029 — more than double the current rate. ($1 = 0.7732 pounds) (Reporting by Adela Suliman, Editing by Claire Cozens. Thomson Reuters Foundation)


Tankers defer retrofits to cash in on freight rates

Updated 19 October 2019

Tankers defer retrofits to cash in on freight rates

  • The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week

SINGAPORE: Tankers that had been scheduled to install emissions-cutting equipment ahead of stricter pollution standards starting in 2020 have deferred their visits to the dry docks to capitalize on an unexpected surge in freight rates, three trade sources said.

US sanctions on subsidiaries of vast Chinese shipping fleet Cosco in September sparked a surge in global oil shipping rates as traders scrambled to find non-blacklisted vessels to get their oil to market.

The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week.

By comparison, prior to the sanctions, shipping crude from the US Gulf to China cost around $6 million-$8 million.

The extraordinary spike in freight rates proved too good to miss for some shipowners who were due to send vessels to the dry docks for lengthy retrofitting and maintenance work.

“We can confirm several owners have postponed dry docking earlier scheduled for the months of October and November to take advantage of the skyrocketing freight rates,” said Rahul Kapoor, head of maritime and trade research at IHS Markit in Singapore.

The shortage of ships to move crude oil was so acute that some shipowners also switched from carrying so-called “clean” or refined fuels like gasoline to “dirty” cargoes that include crude oil, despite the costs of having to clean them later.

“Current rate levels are a no-brainer for pushing back scrubber retrofitting,” said Kapoor.

Starting Jan. 1, 2020, the International Maritime Organization (IMO) requires the use of marine fuel with a sulfur limit of 0.5 percent, down from 3.5 percent currently, significantly inflating shippers’ fuel bills.

Only ships fitted with expensive exhaust cleaning systems, known as scrubbers, which can remove sulfur from emissions, will be allowed to continue burning cheaper high-sulfur fuels.

Ships must be sidelined for up to 60 days for fitting these, according to IHS Markit and DNV GL.

While freight rates have abruptly come off their recent highs, shipowners can still profit from the higher charges.

“One cargo loading at current elevated rate levels can not only finance the scrubber capex, but also account for extra costs incurred to install the scrubber at a later date,” said Kapoor, referring to the capital expenditure of fitting the scrubber.

Freight rates are expected to hold firm for the rest of the year.

“With seasonal demand support and tanker supply deficit still pronounced, we expect (fourth-quarter) tanker freight rates to stay elevated and end the year on a high note,” Kapoor said.